Mumbai: Inox Wind Ltd, India’s second largest wind-turbine maker by market share, expects to get a boost from the upcoming wind-solar hybrid policy, the newly-announced central tender of 1 gigawatt (GW) under reverse bidding, and implementation of a renewable generation obligation (RGO) on power producers, the company’s executive director Devansh Jain said in a phone interview on Monday.

Jain said Inox Wind is waiting for the hybrid policy for wind and solar energy to be announced in the coming few months, which will result in higher efficiency and increased internal rate of return (IRR) for several of the existing wind projects. Inox Wind, which installed close to 800 megawatt (MW) of capacity for its customers in fiscal 2016, expects to become debt-free by the end of this fiscal, he said.

“We control the largest land bank in the Indian wind sector. It is natural the day hybrid policy does come in; we simply need to import solar panels and put them up on the same sites, which we control the common infrastructure for. At the end of the day, it’s an IRR game. Hybrid will only improve returns for our customers from the same site because the cost of common infrastructure and land is already accounted for," Jain said.

For example, a 400MW wind energy plant can add about 80-110MW of solar capacity overnight, once the policies are in place, he said. Apart from manufacturing and supplying wind turbine generators, the company also provides infrastructure and evacuation for renewable power producers.

Established in 2009, Inox Wind is one of the fastest growing wind-turbine makers in India and has installed over 2GW of capacity for its customers till date. The Indian unit of Spanish wind-turbine maker Gamesa India is the largest company in the sector by market share and has installed 3GW of turbines till date, while Suzlon Energy Ltd has so far installed 9.5GW of wind capacity, but it was built over a longer period of time. Gamesa, Inox Wind and Suzlon together hold about 80% of the wind turbine market in India.

Inox Wind had a net debt of ₹ 934 crore as on 31 March. The stock has fallen 18% in the last six months, hurt in part by high receivables and debt, despite doubling revenue due to strong volumes in the fourth quarter ended March. Jain said the company expects to generate “huge cash flows within this year".

India expects to add 4GW of wind energy capacity this fiscal, up from 3.3GW last year. The top three wind-turbine makers will account for 3GW of this capacity addition, Jain said.

In fiscal 2016, Suzlon installed projects totalling 900MW, while Inox Wind and Gamesa installed about 800MW and 1GW of projects in the same period, respectively.

The wind sector faces two challenges this year. The government has proposed to end generation-based incentives for independent power producers and reduce the accelerated depreciation benefits to 40% from the current 80%. This could hurt IRRs by 2-3%.

On the positive side, it has set non-solar renewable purchase obligation (RPO) target for state distribution companies (discoms) at 8.75% for this fiscal, which is set to nearly double by 2022.

RGO, which is expected to become a law, will make it mandatory for power producers to set up a percentage of their capacity for renewable energy.

Any negative impact from these policy changes will be offset by higher efficiencies due to bigger turbine blades and tower hub heights, and cost of energy, which is expected to fall about 8-10% year-on-year for the next three years, Jain said. Sector companies have upgraded from manufacturing 100-metre blades to 113-m blades and to 120-m towers in recent months, which are expected to increase plant load factor and reduce the cost of energy.

The Central government also recently announced awarding 1GW of wind power projects connected to the Central Transmission Utility under reverse auction in a bid to ease transmission of wind power to non-windy states. In a reverse auction, the role of buyer and seller is reversed and a business bid is won by an entity quoting the lowest price. Only eight states in India are suitable for wind power projects—Gujarat, Karnataka, Maharashtra, Andhra Pradesh, Tamil Nadu, Rajasthan, Madhya Pradesh and Telangana. These states use feed-in tariffs, which effectively compensate generators of wind and solar power by setting a price per unit that covers their cost and guarantees a certain rate of return.

“This is going to be a huge game-changer particularly for companies like Inox Wind, because companies which are the most competitive from the cost of energy perspective have the maximum to gain out of this," Jain said.

Rival Suzlon Energy will be one of the biggest beneficiaries of competitive bidding in the tender, a company spokesperson said in an email response on 13 August. Suzlon expects the wind energy market to grow at 30% this fiscal and it hopes to reclaim 50% of the market share in the coming years.

Inox Wind expects to occupy the top two spots in India.

India has set itself a target of achieving 100GW of solar energy and 60GW of wind capacity by 2022. It currently has 27GW of wind and about 8GW of solar capacity installed.